How technology has changed tax compliance in the GST era


The Goods and Services Tax was launched by the government in 2016. GST is supposed to subsume most of the indirect taxes that were prevalent during the VAT era and provide a uniform tax regime across the country.

But how to achieve this? The government came up with the Goods and Services Tax Network (GSTN) which is the technology network to ensure that the transition to the new regime is smooth.

To ensure proper tax compliance, the first step that needs to be taken is calculating the right amount of GST. After this, the new tax regime required the firms and businesses to make sure that there were periodic updates/uploads of sales and purchase data with reconciliation for tax credits and payments. To bring about transparency and minimize tax evasion, there was also a need for reconciliation between supplier and recipient. Thus, tax technology came into picture.

The GSTN is a nonprofit non-government company that provides the shared It infrastructure and service to both central and state governments including tax payers and other stakeholders. It is the backbone of the GST framework. The GSTN provides the frontend services of registration, returns and payments to all taxpayers.

The GSTN is structured in such a manner so that it functions as a single repository of information by storing information from every invoice. Needless to say, a technology ecosystem was required to effectively handle the transfer and dissemination of information. The GSTN intends to fulfil this objective by utilizing a network of GSPs (GST Suvidha Provider) and ASPs (Application Service Provider). The function of GSPs is to act as channels that will help to transmit the information between the GSTN server and the ASPs and to also provide a secure network for it. The ASPs will have the responsibility of performing all the activities that are required to ensure a smooth monthly return filing.

How technology helped large enterprises?

To ensure that large enterprises function smoothly, an ERP integrated GST solution is required to take care of all the GST compliances and so ensure that the business runs smoothly.

ERP has become integral because GST filing requires uploading of invoice and reconciliation of the mismatches. The problem that large enterprises face is that they must deal with millions of invoices and it is almost impossible to upload those manually. Precious business time will be lost to deal with time-consuming GST compliance issues. Thus, the ERP, an optimized automated system to deal with the prerequisites and also for expediting the compliance process, was put into action.

Using ERP will ensure that synchronization of data from the ERP, converting it into a GST supported format, uploading invoice details, rectifying minor mismatches and even filing of GST would be automatically done. When a company deals with millions or billions of invoices, mismatches are bound to occur. If technology (ERP) takes care of the minor ones, then the business can focus on the major value mismatches and correct them to successfully file the GST returns.

The application from ASPs help taxpayers to interact with the GSTN. All they require is a computer connected to the internet so as to upload the invoices. Whether a business runs successfully or not in the GST regime depends on its ability to interact smoothly with the GSTN server. This is where ASPs prove to be effective.

One of the fundamental aspects of GST is invoice matching. GST requires dealing with invoices within a period. This would not have been possible with outdated systems and obsolete technology that were used in the previous tax regime. Thus, there was the need for an intelligent technology that will provide a bulk solution to the mismatches in invoices. This will not only save time but also will help to save considerable resources.

Businesses, in the GST era, require interacting with the GSTN system. This process is made easy by an advanced application that can maneuver the whole gamut of transformation and ensure that day-to-day tasks are performed quickly and effortlessly. Thus, the first step towards achieving compliance would require understanding the importance of technology in the GST regime and wisely choosing the right application for the business.

Thus, businesses should install a good ERP system that is fully GST compliant and which is integrated with an ASP application.

Thus, technology plays a monumental role in revolutionizing and ensuring tax compliance in the GST era.

However, you can visit encomply to take care of all your GST-related problems. Thank you.


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